Who are the Architects of Economic Collapse? Michel Chossudovsky Global Research November 10, 2008 ( http://www.infowars.com/?p=5853 ) Most Serious Economic Crisis in Modern History The October 2008 financial meltdown is not the result of a cyclical economic phenomenon. It is the deliberate result of US government policy instrumented through the Treasury and the US Federal Reserve Board. This is the most serious economic crisis in World history. The "bailout" proposed by the US Treasury does not constitute a "solution" to the crisis. In fact quite the opposite: it is the cause of further collapse. It triggers an unprecedented concentration of wealth, which in turn contributes to widening economic and social inequalities both within and between nations. The levels of indebtedness have skyrocketed. Industrial corporations are driven into bankruptcy, taken over by the global financial institutions. Credit, namely the supply of loanable funds, which constitutes the lifeline of production and investment, is controlled by a handful of financial conglomerates. With the "bailout", the public debt has spiraled. America is the most indebted country on earth. Prior to the "bailout", the US public debt was of the order of 10 trillion dollars. This US dollar denominated debt is composed of outstanding treasury bills and government bonds held by individuals, foreign governments, corporations and financial institutions. "The Bailout": The US Administration is Financing its Own Indebtedness Ironically, the Wall Street banks âwhich are the recipients of the bailout moneyâ are also the brokers and underwriters of the US public debt. Although the banks hold only a portion of the public debt, they transact and trade in US dollar denominated public debt instruments Worldwide. In a bitter twist, the banks are the recipients of a 700+ billion dollar handout and at the same time they act as creditors of the US government. We are dealing with an absurd circular relationship: To finance the bailout, Washington must borrow from the banks, which are the recipients of the bailout. The US administration is financing its own indebtedness. Federal, State and municipal governments are increasingly in a straightjacket, under the tight control of the global financial conglomerates. Increasingly, the creditors call the shots on government reform. The bailout is conducive to the consolidation and centralization of banking power, which in turn backlashes on real economic activity, leading to a string of bankruptcies and mass unemployment. Will an Obama Administration Reverse the Tide? The financial crisis is the outcome of a deregulated financial architecture. Obama has stated unequivocally his resolve to address the policy failures of the Bush administration and "democratize" the US financial system. President-Elect Barack Obama says that he is committed to reversing the tide: "Let us remember that if this financial crisis taught us anything, itâs that we cannot have a thriving Wall Street while Main Street suffers. In this country, we rise or fall as one nation, as one people." (President-elect Barack Obama, November 4, 2008, emphasis added) The Democrats casually blame the Bush administration for the October financial meltdown. Obama says that he will be introducing an entirely different policy agenda which responds to the interests of Main Street: "Tomorrow, you can turn the page on policies that put the greed and irresponsibility of Wall Street before the hard work and sacrifice of men and women all across Main Street. Tomorrow you can choose policies that invest in our middle class and create new jobs and grow this economy so that everybody has a chance to succeed, from the CEO to the secretary and the janitor, from the factory owner to the men and women who work on the factory floor.( Barack Obama, election campaign, November 3, 2008, emphasis added) Is Obama committed to "taming Wall Street" and "disarming financial markets"? Ironically, it was under the Clinton administration that these policies of "greed and irresponsibility" were adopted. The 1999 Financial Services Modernization Act (FSMA) was conducive to the the repeal of the Glass-Steagall Act of 1933. A pillar of President Rooseveltâs "New Deal", the Glass-Steagall Act was put in place in response to the climate of corruption, financial manipulation and "insider trading" which resulted in more than 5,000 bank failures in the years following the 1929 Wall Street crash. Under the 1999 Financial Services Modernization Act, effective control over the entire US financial services industry (including insurance companies, pension funds, securities companies, etc.) had been transferred to a handful of financial conglomerates and their associated hedge funds. Bill Clinton signs into law the Gramm-Leach-Bliley Financial Services Modernization Act, November 12, 1999 The Engineers of Financial Disaster Who are the architects of this debacle? In a bitter irony, the engineers of financial disaster are now being considered by President-Elect Barack Obamaâs Transition Team for the position Treasury Secretary: Lawrence Summers played a key role in lobbying Congress for the repeal of the Glass Steagall Act. His timely appointment by President Clinton in 1999 as Treasury Secretary spearheaded the adoption of the Financial Services Modernization Act in November 1999. Upon completing his mandate at the helm of the US Treasury, he became president of Harvard University (2001- 2006). Paul Volker was chairman of the Federal Reserve Board in the l980s during the Reagan era. He played a central role in implementing the first stage of financial deregulation, which was conducive to mass bankruptcies, mergers and acquisitions, leading up to the 1987 financial crisis. Timothy Geithner is CEO of the Federal Reserve Bank of New York, which is the most powerful private financial institution in America. He was also a former Clinton administration Treasury official. He has worked for Kissinger Associates and has also held a senior position at the IMF. The FRBNY plays a behind the scenes role in shaping financial policy. Geithner acts on behalf of powerful financiers, who are behind the FRBNY. He is also a member of the Council on Foreign Relations (CFR) Jon Corzine is currently governor of New Jersey, former CEO of Goldman Sachs. Larry Summers (left) and Timothy Geithner At the time of writing, Obamaâs favorite is Larry Summers, front-runner for the position of Treasury Secretary. Harvard University Economics Professor Lawrence Summers served as Chief Economist for the World Bank (1991â1993). He contributed to shaping the macro-economic reforms imposed on numerous indebted developing countries. The social and economic impact of these reforms under the IMF-World Bank sponsored structural adjustment program (SAP) were devastating, resulting in mass poverty. Larry Summerâs stint at the World Bank coincided with the collapse of the Soviet Union and the imposition of the IMF-World Bankâs deadly " economic medicine" on Eastern Europe, the former Soviet republics and the Balkans. In 1993, Summers moved to the US Treasury. He initially held the position of Undersecretary of the Treasury for international affairs and later Deputy Secretary. In liaison with his former colleagues at the IMF and the World Bank, he played a key role in crafting the economic "shock treatment" reform packages imposed at the height of the 1997 Asian crisis on South Korea, Thailand and Indonesia. The bailout agreements negotiated with these three countries were coordinated through Summers office at the Treasury in liaison with the Federal Reserve Bank of New York and the Washington based Bretton Woods institutions. Summers worked closely with IMF Deputy Managing Director Stanley Fischer, who was later appointed Governor of the Central Bank of Israel. Larry Summers became Treasury Secretary in July 1999. He is a protÃ©gÃ© of David Rockefeller. He was among the main architects of the infamous Financial Services Modernization Act, which provided legitimacy to inside trading and outright financial manipulation. Larry Summers and David Rockefeller "Putting the Fox in Charge of the Chicken Coop" Summers is currently a Consultant to Goldman Sachs and managing director of a Hedge fund, the D.E. Shaw Group, As a Hedge Fund manager, his contacts at the Treasury and on Wall Street provide him with valuable inside information on the movement of financial markets. Under the helm of Larry Summers and as a direct result of the financial meltdown, the D. E. Shaw Group made record profits. At the end of October 2008, at the height of the financial crisis, the D. E. Shaw Group announced $7 billion in revenue, a 22 percent increase over the previous year, "with nearly three times more cash on hand than a year ago" (2theadvocate.com, 31 October 2008). Putting a Hedge Fund manager (with links to the Wall Street financial establishment) in charge of the Treasury is tantamount to putting the fox in charge of the chicken coop.